Tax-free parental benefits – donations – Family businesses can now change hands electronically

The increase of the tax-free limit of parental benefits and donations from 150,000 euros to 800,000 euros brought an explosion not only in the real estate transfers but also in the transfers of shares of family businesses.

In the last quarter, hundreds of small and medium-sized family businesses have changed hands, with shares passing from parents to children and from grandparents to grandchildren.

According to information, recently large packages of shares of small and medium enterprises have been transferred with parental benefit to children or grandchildren without the beneficiaries paying tax to the Tax Office. The tax-free amount of 800,000 euros that applies to each parent can be doubled or even tripled.

For example, in the case of a family business with the father and the mother being the shareholders, shares worth a total of € 1.6 million can be transferred to their child free of any tax (€ 800,000 from the father and € 800,000 from the mother). In fact, in the case that the child’s grandfather and grandmother are shareholders in the company, then the tax-free limit of the value of the shares that can be transferred is raised to 3.2 million euros (800,000 X 4 = 3,200,000).

With the provisions that have been activated since October 1, 2021, the tax for parental benefits and donations to first-degree relatives has been zeroed up to 800,000 euros.

It is noted that the first category includes the taxpayer’s spouse or the person who has entered into a civil partnership with the taxpayer, i.e. the first degree blood cations, children from legal marriage, children from a single-parent family (that live with their mother), children who are, voluntarily or judicially, in the custody of their father, legalized by a subsequent marriage or in court against both parents. Also in this category belong the second degree blood cations (grandchildren) and the first degree blood anions (parents).

Electronic parental benefits

Declarations of parental benefits and donations to individuals that belong in the first category, as mentioned above, are submitted electronically on the myProperty platform. The donation-parental benefit declaration is completed by the certified notary who will prepare the notarial deed and is submitted by the parties using their personal Taxisnet passwords.

Assets are submitted electronically and transferred by a notarial document. When a contract is not to be drawn up, documents are submitted by handwritten declaration to the Tax Office. Attention: donations – parental benefits of sums of money to the persons that belong in the first category, as mentioned above, for whom a notarial document is prepared, are declared through the myProperty application, only if there is a transfer of the amount of money through financial institutions and the corresponding document of the bank is submitted.

If the money is not transferred through financial institutions, even if a notarial document is drawn up, they are declared by handwritten declaration to the Tax Office. Also, donations of money to persons of the second and the third category, regardless of whether they are made with a notarial document or by transfer through financial institutions, etc., are always declared by handwritten declaration to the Tax Office.